Search form

Politics: Will Currency Manipulator Be the New Schoolyard Rant Against Asians?

When movies starring Jackie Chan began distributing in the
United States, his name became a favorite taunt against Asian Americans in
school yards across the country.

Now, US leaders have introduced a new label into the American
psyche – “currency manipulator.”

Both President Barack Obama and challenger Mitt Romney have
held nothing back in finding a scapegoat for America’s economic woes. Forget
the big banks that sent the US economy into a tailspin that it has yet to
recover from, or European countries that can no longer pay their bills. The
candidates both agree that China is the greatest economic rival of the US and the
easiest punching bag, and are racing to convince the electorate that they will
be the tougher president against the world’s second largest economy.

In debates, Romney has pledged to label China as a currency
manipulator and slap tariffs on Chinese products as he sees fit. Obama has
repeatedly touted his tariff in 2009 against Chinese tire imports as an example
of protecting American jobs, especially in key battleground states such as Ohio
and Michigan.

The sudden attention on China is reminiscent of the 1980s,
when Japan was the source of angst for many in the US due to the dominance of Japanese
cars and electronics. Now, China is catching up to the US, while holding $1.15 trillion
in US debt, making people jittery that the US is borrowing money from its greatest
geo-political rival.

What makes China an even easier target is that Americans do
not know much about its society and culture. The Chinese government is also
vilified as being undemocratic, opaque in decision-making, and often difficult
to negotiate with.

But most analysts and media outlets agree that both
candidates are guilty of misrepresenting the issue for political gain.

On currency, the Chinese yuan has risen 8.5
percent against the US dollar since Obama was sworn in, and about 30
percent since 2005, when the Chinese government removed the currency’s peg
to the dollar. Although some would argue that the currency has more room to
appreciate, the direction is unmistakably in the US’s favor.

Obama’s tariff against Chinese tire imports did save about
1,200 jobs, but that cost the US $1.1 billion, according to the Peterson
Institute for International Economics. That cost came from higher prices
that US consumers paid for more expensive tire imports from other countries. The
total bill was a whopping $917,000 per job saved - hardly a good deal.

Once elected, neither candidate can do much by punishing
China, because the US stands to lose tremendously if a trade war broke out.

China is now so integral to the US economy that when the Chinese
economy slows down, the US economy also sneezes. General Motors, which Obama
proudly claims to have saved, sold 34,000
more cars in China than it did in the United States in September. About 18
percent of Apple Inc’s revenues in the second quarter came from China
sales.

If the US and China ever retaliated against each other with
tariffs and trade barriers, economic havoc would result for consumers and
companies alike.

Indeed, administrations usually tone it down when they
conduct bilateral relations. US officials who visit Beijing tend to say publicly that China’s peaceful rise is good for the world, and that China stands to
benefit the most from opening up its economy. The reasons they give are pronouncedly more positive and
forward-looking – if Chinese companies compete fairly with US companies, they
will become more competitive. If China protects US
intellectual property rights, Chinese products will also enjoy the same
protections.

Right now, the candidates are making threats against China that they will not likely carry out.

If the China-bashing continues for the sole purpose of scoring political points, the unintended effect could
be a spike in nativist, Us-versus-Them sentiments at home. Both Obama and
Romney’s rhetoric could become dinner table and living room fodder across the
US. It’ll only be a matter of time before kids start singling out Asian Americans in the
school yard.

Lin Yang is currently the Political Editor of Hyphen magazine and the Taipei Correspondent for international newswire Deutsche Presse-Agentur (DPA). He has also written for the New York Times, IEEE Spectrum, The Straits Times, South China Morning Post, and Taiwan's Central News Agency. Straddling two cultures at heart, he writes stories and follows politics on both sides of the Pacific.

Suggested Reads

Comments

LTE wrote on Thu, 10/25/2012 - 10:26am

"The candidates both agree that China is the greatest economic rival of the US and the easiest punching bag"
.
With good reason. In a world of free trade low cost producers can do severe damage to nations like the US, Europe and Japan.
There are only 2 alternatives:
1) Drive China's costs up
2) Radically reduce everyone else's costs.
.
"The sudden attention on China is reminiscent of the 1980s, when Japan was the source of angst for many in the US due to the dominance of Japanese cars and electronics."
.
I remember the Japanese saying to us "Lazy Americans! Just work harder!". The Japanese didn't appreciate what the cheap yen did for them. Now that they are competing against China with it's low value currency, they realize hard work is not enough. Japanese workers stand by helplessly as they watch their jobs go to China. Like their US counterparts Japanese graduates leave college with degree in hand to find they can't get anything but burger flipping jobs. The Japanese government predicted by next year the country will be living off their capital investments as they will start seeing continual merchandise trade deficits. Part of me wants to laugh yet I feel a bit of sympathy for them.
.
The US is bettered position than Japan, we are still rich in resources that can feed basic industries where Japan is not so well positioned. The US's problem is we have a social/political class that wants to snuff out these prime businesses because they are seen as so yesterday,
.
Ross Perot was not incorrect when he said the great sucking sound of jobs going to Mexico (in fairness it's not only China).
.
"when the Chinese government removed the currency’s peg to the dollar."
.
Officially, unpegged. Unofficaily, still pegged. Chinese currency trades within a relatively narrow range.
.
"Once elected, neither candidate can do much by punishing China, because the US stands to lose tremendously if a trade war broke out."
.
Romney is right on this one, we trade a little to them, they trade a lot to us. The US would sustain some damage, China's economy would implode. Nothing strikes fear into Beijing like the thought of millions of unemployed wandering aimlessly around the country,
.
The issue of trade and it's effect on the economy is fairly complex. The free trade/international trade argument was always faulty on it's face, you can not run billions of dollars of trade deficits year after year after year and expect to have a healthy economy with high wage jobs. Eventually these deficits will work their way up the economic ladder and many experts that write about the wonderfulness of trade theory will see their positions cut and eliminated as there is no economy left to sustain the expense of keeping them.
.
I deal with some Chinese companies. There is NO WAY American companies can compete against their cost structure. If you want to compete against Chinese companies, you will have to move your factories to China. Some heavy, bulky and expensive to ship items can be made here, but Apple will not be building Iphones in South Carolina anytime soon.
.
I do not blame China or the Chinese, I would expect their government to do what ever their government can for them. Even if their government likes to beat up it's citizens, jail protesters and steal poor people's homes, Beijing still works to make sure the general population is well fed and clothed. China's government is doing exactly what it should be doing for it's people.
.
On the other hand, Americans are stuck with weak, pandering politicians put into place by a well moneyed class that benefits from trade. One reason I like Romney is his we trade a little with them, they trade a lot with us comments. You can be sure Beijing finds that troubling beyond belief and hopefully he'll play some serious poker/hardball with China, they do have more to lose.
.
"the unintended effect could be a spike in nativist, us-versus-them sentiments at home"
.
I am surprised it has taken this long for a post like this to show up.
.
Seeing this as a possibility, I realized there was a money making opportunity here, selling American flag lapel pins with the inscription "Made In America" on them to Chinese, Japanese and Korean Americas. A deluxe model that plays "I'm A Yankee Doddle Dandy" is possible. I am waiting for quotes from some Chinese vendors now.

Why isn't anyone bringing up the fact that the Bush/Cheney administration, with the help of Congress, deregulated many of the trade agreements with China? China didn't come here begging for our jobs, our entrepreneurs went there so they can make more money. They make more money, American's end up spending more to purchase items. So called patriots like Bush and Cheney got this ball rolling and it's snowballed into a mess for the USA! China is taking advantage of a situation dropped in their laps by the USA! Who wouldn't?

"Why isn't anyone bringing up the fact that the Bush/Cheney administration"
.
You're Barack Obama, aren't you?
.
Trade policy goes back to the 1970's, maybe earlier. The issues concerning trade and free trade were discussed and debated and many times it appears the American workers were an after thought, if they were thought of at all.
.
Trade was seen in part as a social engineering tool, send the Chinese jobs and they'll become happy Jeffersonian democrats. This thinking was widely promoted and supported by people of all political stripes and colors. When this way of thinking started picking up steam in the late 1980's I could never figure out how it was going to work for millions of displaced workers. I am now learning how it is working out.
.
Today you have workers squeezed from the bottom by illegals, squeezed from the top by free trade competition. Those who are working face stagnant wage growth and an almost dead flat total number of Americans having jobs (unemployment should not be the sole number used) for years.
.
"China didn't come here begging for our jobs"
.
Oh yes they did.
.
"China is taking advantage of a situation dropped in their laps by the USA!"
.
Yes they are!
.
Barack Obama announced the free trade pact with South Korea. I was curious as to what we were going to sell them. We did get a 3% reduction on import tariffs for American made cars so I am sure with that massive cut Koreans are lined up around the block waiting their turn to buy Chevys with the same zest they buy Iphones.
.
The first report in says the Koreans are buying lower taxed American made alcohol drinks like beer and wine. I can imagine in 10 years Koreans blogging as to how America turned them into a nation of boozers and we'll get to read those blogs on Samsung cell phones.
.
In all fairness to our Asian-American citizens, while ducking for cover when you get a blast of anti trade heat, you can take comfort in knowing it's not just China. South of the Rio Grande is a country that also under cut American labor and jobs by having few labor laws or social safety nets. By turning the United States of America into it's welfare department, it not only found a market for it's cheaper goods, it found a place to send it's excess labor. Mexico's millionaires and billionaires thank you for the tax savings you gained for them.
.
Probably the best thing Asians Americans can do is just say, trade policy hurts us, just like it hurts you. It can be a bonding experience.